Employers’ vicarious liability for employee’s discriminatory conduct

The decision of the Northern Territory Anti-Discrimination Commission in Frances Newchurch v Centreprise Resource Group Pty Ltd, Mr Graham Ride and Ms Sarah Ride [2016] NTADComm 1 (Newchurch decision) highlights that employers may be found to be vicariously liable for their employee’s discriminatory conduct where it is not demonstrated that it took “all reasonable steps” to prevent the employee from doing the discriminatory act.

In the Newchurch decision, Commissioner Rice determined that two employees of Centreprise Resource Group Pty Ltd (the Employer Respondent) discriminated against Frances Newchurch (the Applicant) on the ground of her race.

The Applicant alleged that Mr Graham Ride and Ms Sarah Ride (the Employee Respondents) used derogatory language (for example, using the word “black” in reference to Indigenous Australians) during work meetings and voicing their personal opinions about Indigenous Australians.  In particular, it was alleged that one Employee Respondent made discriminatory statements including that Aboriginal people “rely too much on welfare and Government handouts”.

The Employee Respondents denied the allegations, and argued that they did not say the statements as alleged or sought to clarify their statements.

After considering the evidence, Commissioner Rice was satisfied that the employees’ comments made distinctions on the basis of race in particular around distinguishing between Indigenous people who are westernised and Aboriginal people who live in a traditional manner in the bush. As we have previously examined in our blog Boo” or “Boo-Urns” – Australia’s racial discrimination laws – does intention matter?” Commissioner Rice commented that “race-based language can be used without malice...but even in the wrong context it can nevertheless nullify or limit equal opportunity, or be less favourable treatment”.

Commissioner Rice awarded compensation to the Applicant in the amount of $12,000.00. Importantly however, he determined that the Employer Respondent was vicariously liable for the actions of the Employee Respondents and that it did not take “all reasonable steps” to prevent the Employee Respondents from engaging in discriminatory conduct.

Commissioner Rice commented that the Employer’s Policy and Procedure Manual and references in the employment contracts were not sufficient to show that “all reasonable steps” were taken by the Employer Respondent. He noted that there was a lack of evidence that the policies were communicated or published to employees, that anti-discrimination training was provided or that there was an equal employment opportunity management plan in place.

Accordingly, he ordered that 25% of the compensation awarded was to be paid by the Employer Respondent.

The Newchurch decision serves as a reminder to employers that it is not enough to have in place an anti-discrimination policy and expect employees to independently absorb and then abide by the policy. Management must also publicise the policy and train staff in relation to its content as well as making it available on the intranet, noticeboards and or as part of toolbox talks.  As a matter of best practice employers should have regular anti discrimination training for all employees to mitigate the risk of vicarious liability.

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